How Dealers Can Stay Profitable Amid Affordability Pressures

Profitability in automotive retail is increasingly tied to flexibility, transparency, and operational discipline, and Jeff Rosen shares how his group is adapting to meet the moment.

On this episode of Inside Automotive, Jeff Rosen, President and CEO of Rosen Automotive Group and Chairman of Hyundai’s Dealer Advisory Board, discusses how a diversified franchise portfolio is helping navigate affordability pressures, changing consumer demand, and evolving technology. Rosen explains why Hyundai continues to outperform, how AI is beginning to reshape dealership operations, and why transparent pricing is becoming essential to preserving trust in the franchise model. He also shares strategies for sourcing affordable used inventory and weighs in on how global competition could influence the U.S. market.

Key discussion points:

•  Why Hyundai’s hybrid lineup continues to support growth and momentum 
•  The role of diversified franchise operations in navigating market shifts 
•  How AI is being applied across service, customer engagement, and sales opportunities 
•  Why pricing transparency is becoming a competitive necessity 
•  Strategies for sourcing affordable used inventory under $30,000 
•  What Chinese automaker competition could mean for dealers and OEMs

Inside Automotive with Jim Fitzpatrick is powered by CBT News, your go-to source for the latest news, trends, and insights in retail automotive. Subscribe for more interviews with top industry leaders, dealership innovators, and experts shaping the future of automotive.

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Transcript

Welcome And Guest Introduction

SPEAKER_00 0:07

Welcome to Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick 0:14

The auto retail landscape is evolving fast. At the same time, dealers are navigating margin pressure while looking for new ways to drive profitability. Joining us today to share his perspective on business today at his dealership is Jeff Rosen, president and CEO of Rosen Automotive Group. He's also chairman of Hyundai's dealer advisory board. So Jeff, thank you so much for taking the time out of what I would imagine is a very busy schedule. You mentioned to me before we got recording that you're a grandfather now, so congratulations on that. That takes top priority over running any dealership, right?

SPEAKER_02 0:46

You know, it's it's a great opportunity to uh kind of relive your childhood, or you know, I really didn't get a chance to see my kids as much as let me see you being in the car business. You spend hours and hours and hours, and for me, if you have a real supportive spouse, that helps considerably, which thank God I do.

Jim Fitzpatrick 1:05

That's right, that's right. The kids aren't getting into the business right now.

SPEAKER_02 1:07

So the running joke that I think I told you before is I didn't know I had a son until he started working here. So I said, You look familiar, and uh he goes, I'm your son. I said, Oh, okay. So uh we've got to we've got reacquainted, so that's been great, and then obviously the grandchildren are uh a joy to your perspective. You have grandchildren, you can play with them, spoil them, and then you give them back at the end of the day and let the parents uh discipline them.

Jim Fitzpatrick 1:34

So great, great things. There's so many dealers out there that just heard that and can appreciate that because in the car business, as I was and uh and you are now, you you realize that you look back and you're like, wow, I miss little league games and soccer games and basketball and high

Family Life In The Car Business

Jim Fitzpatrick 1:50

school events, and because we're always working Saturdays and evenings and everything else, so I can totally appreciate where you're coming from on that. But uh we're both blessed to be working with our kids in the business, so it's great. So um a couple of things to catch up on with you that uh so I was looking forward to today's conversation. First and foremost, Hyundai, um, two percent uh year-over-year increase in business, right?

SPEAKER_02 2:11

Yep, uh Hyundai is doing very well in terms of volume. Uh we've got a great product offering. You know, the Palace is brand new right now. Beautiful car. The hybrid is red hot. You know, they have a lot of opportunity for the spectrum of all the demographics. Yeah, they've got uh cars, sedans, they have CUVs, they have SUVs, and obviously affordability is is the key word right now, and you know they offer uh uh a vast array of product that uh you know from luxury to uh uh economics to uh fuel efficiency and EVs. So they uh they are doing very well in uh five years in a row of uh increased growth, and uh we're gonna go six for six right now as well.

Jim Fitzpatrick 2:59

That's great, that's great. And you mentioned hybrid, I think it was a 52% increase I read in hybrid sales year over year.

SPEAKER_02 3:07

You know, it's a great bridge to EVs, obviously. Yeah, you know, we can kind of touch any these, you know, uh with the uh new administration and obviously the credit going away, that's uh put a little bit of a damper on uh the EV business.

unknown 3:24

Oh, yeah.

SPEAKER_02 3:24

So I think consumers right now are looking for hybrids right now, and you know, Hyundai has a great offering of hybrids from the sedans up into the Palisade luxury uh vehicles. So you know, we're very excited and we're looking forward to a good 2026 in terms of

Hyundai Momentum And Hybrid Demand

SPEAKER_02 3:40

uh continuing the momentum.

Jim Fitzpatrick 3:41

That's great. Had have you seen an increase in um demand in the showrooms since the war started and prices shot up with the gas pumps? Have you seen an increase in hybrids and EVs?

SPEAKER_02 3:54

Well, uh we've been doing very well with hybrids, but uh I think right now, you know, with uh what's going on in the Middle East right now and what that's done to gas prices, even here, but I know it's even worse in different regions uh from the dealers that I talked to.

unknown 4:10

But you know, again, affordability, I think is huge.

SPEAKER_02 4:14

And uh with the hybrid and the competitiveness of the hybrid in terms of leasing and on the purchase side as well, I think that's a great alternative to ice and obviously a bridge to EV as well.

Jim Fitzpatrick 4:25

Yeah, for sure. Um couple of things is uh dealers are dealing with a number of different things out there. One of them is the franchise system. Obviously, the you know you've got uh uh Scout coming on board here, and you've got uh VW now saying, hey, we're gonna take our products directly to consumers. I know that's something that you're passionate about. Talk to us about that. I mean, that the franchise system is uh a tried and true and proven concept of distribution of automobiles, but I guess VW VW doesn't feel that way.

SPEAKER_02 4:54

Well, I I right now don't have VW, but all the OEMs I have right now are definitely committed to the franchise system. I think that's the most important vessel for the public to purchase a vehicle.

Jim Fitzpatrick 5:05

Right.

unknown 5:06

Uh obviously uh we have to evolve as well because I think there's a lot of headwinds out there, and I think we need to meet the customer where they want to be met, and we have to get on board and you know, look at the uh business model of a Carvana or maybe even a Tesla.

SPEAKER_03 5:21

Right.

SPEAKER_02 5:22

And I think we need to really provide a seamless process to really give the customer a great experience. You know, the new consumer right now does all their research online, yeah, and they come into the showroom, they don't want to deal with the back and forth.

unknown 5:36

They don't want to deal with, you know, the brain damage and the pricing and all of the above.

SPEAKER_02 5:42

So it's it's as our franchises go, we really try and work with the digital retailing tools as the consumer goes on. They can go from to nuts when they purchase the car.

unknown 5:53

But the consumer

Franchise Dealers Versus Direct Sales

unknown 5:55

really wants to come into the dealership.

SPEAKER_03 5:57

They want to get their personal experience, talk to the salesman, touch the vehicle, drive the vehicle.

SPEAKER_02 6:02

And also the biggest, the probably most important factor is obviously we're about 70% finance penetration. So the consumer is it's is a little bit more difficulty in terms of the financing aspect of it with the uh franchise system and coming to the dealership. That that portion is streamlined. So we offer that.

unknown 6:24

I think that's uh where the consumers stop in their uh their journey, and that's where we really take over.

SPEAKER_02 6:31

And uh again, they want to get in, they want to get out, they want to go over the vehicle, and uh that experience uh pays dividends down the road, and hopefully if we do a great job, we'll retain that customer, they'll refer other customers in and we'll have that person for life.

Jim Fitzpatrick 6:49

Yeah, they got I can't couldn't agree more. Um that being said, uh you know the FTC is now coming down on dealers and and the industry as a whole and saying, hey guys, you got to sit up and fly right on this pricing. It's it just can't be all over the map. You can't have some dealers that are advertising certain numbers, and then when the customer gets there, it's kind of uh, you know, I hate to say main switch, but it's a little bit of main switch for it. Oh, we didn't include the document, we didn't include, you know, you don't qualify for the military uh rebate that we advertise the car with and all the games that sometimes we play in this industry. Um and uh and it this could be this is a very, very important issue, right? I mean there's dealers out there that are that uh have already been fined, but they will, you know, now that the letters have been sent out, there's going to be more fines coming if dealers aren't compliant, right?

SPEAKER_02 7:37

Yeah, I mean, I think total transparency is important. I mean, we have so many consumers that will come into a dealership and they live in our PMA, yeah, and they won't believe the pricing that we're giving them because they're seeing some of this pricing on the internet. And again, we tell them here, they're not gonna honor that price. The problem is they obviously see it in writing, they have a trust that that's what's gonna happen.

SPEAKER_03 8:04

Yeah, and they'll go to that dealership and they won't get the price they want.

SPEAKER_02 8:10

The dealership will work them over, and obviously that customer assurance goes right out the window, and that bastardizes our franchise.

Jim Fitzpatrick 8:18

It does.

SPEAKER_02 8:19

The consumer is gonna be embarrassed, not come back to the dealership, and they're gonna probably look at another brand.

unknown 8:25

So with the franchise, that idea was they have pricing restrictions, you have to honor those prices.

SPEAKER_02 8:32

But you know, with the FTC to your point, now you've got to really be transparent in your pricing with the doctrine, so on and so forth.

unknown 8:39

But I think in the long run, it's better if everybody's on that same playing field. The consumer's gonna get better experience. It's gonna give the dealership and the OEMs that we represent a better light uh in the consumer's mind, and I think the future is better off with transparency. Yeah.

SPEAKER_02 8:59

Now, you don't want to be in a broad brush, you want to look at everything uh on a, I guess, OEM or dealer-by-dealer basis, but in the end, I think it's better for the customer experience, better, better for the OEMs, and it's obviously better for the consumers as well.

Jim Fitzpatrick 9:14

That's right. And you know, we've got to, I think, trust the consumer a little bit in this area. I know that's hard to do in many cases because the consumers at home on their laptop doing their preliminary shopping, and they see, you know, dealership A over here with a price of 30,000, they see dealership B with a price of 28,000. You know, where are they gonna go and who they're gonna check out? Well, this guy's a lot lower than this guy, so I'm gonna go here. But having said that, if the industry does all get together on this, you know, look at companies like Carvana that don't negotiate. They put the price out there and they go, hey, this is you like it, you buy it, you don't like it, don't buy it. Same thing with CarMax. It's you know, they've been doing that for now 30-some years. So I think if we if we all come together, band together on this, it can, to your point, it can be a great thing for the industry moving forward, right?

SPEAKER_02 10:00

Well, I agree with you 100%. And you don't know how many times we get frustrated when we get our own customers that are bought cars from us, right? They look at you and say, why can this gentleman or why can this dealership or this salesman do that, and why can't you? Right. And again, we have to spend more time trying to explain to them that this isn't gonna happen. And when they get there, you have to buy it on a Tuesday afternoon, you have to trade in a Porsche Cayenne, you have to own a farm. I mean, all the different variables that come in, and all you're doing is hurting the customer experience. You're forcing these consumers to go to

FTC Pricing Scrutiny And Transparency

SPEAKER_02 10:40

Tesla or Carvana because they don't want to deal with this bad customer experience, this brain damage that our mantra has always been that's how we do business. So we've got to change that mindset for the consumer.

Jim Fitzpatrick 10:54

That's right. Hey, this is an area that maybe AI can help in, right? I I don't know. What what I are you running your dealership more using AI uh on a daily basis to help help move uh the needle?

SPEAKER_02 11:06

See, I'm I'm a dinosaur, but I definitely have to evolve into the 21st century. So AI has really helped out. You know, we're kind of in that incubation stage. We believe an AI tool that we use right now. Yeah. And it helps definitely in terms of streamlining the service appointment process. It helps us in terms of the BDC. And obviously, we're not open 24-7, so a lot of consumers are looking on the website at three in the morning or four in the morning. And if they reach out, we have a chat line that can help them as well. And the more conversational it gets, the more like you feel like you're not talking to a bot or a robot. The generative AI, conversational AI is continuing to take over, and it's not gonna replace what we have right now, but it's definitely gonna help and enhance our business and make the consumer experience considerably better as well.

Jim Fitzpatrick 12:00

That's right. And many dealerships, maybe yours included, are reporting that they're using it also as a scheduling tool in service to where, like to your point, if somebody's at home at midnight, one in the morning, you know, five in the five in the morning, whatever it might be, and they go, Oh, I gotta schedule my service, comes in handy in that area too, in a big way, right?

SPEAKER_02 12:19

Yep, and it also helps in terms of service to sales. So you should never complain that you're not getting enough consumer traffic because when I walk in my uh service department in the waiting area on a Saturday, you can't find a chair.

unknown 12:35

So our AI tool will go into the appointment schedule.

SPEAKER_03 12:40

Consumers are coming into the dealership for work, and they're just sitting there, and it'll either tip them on their phone through a text, or we'll we'll reach out uh the night before.

unknown 12:52

Well, we have QR codes, they can go onto the QR code and say they're interested, and then we'll have one of our managers go back. So there's so many different things because you have hundreds and hundreds of consumers coming in that would just be overwhelming unless you had AI.

SPEAKER_02 13:08

And then it also goes into our database and looks at consumers that are in inequity, which is a little bit rare, but uh in this day and age, but it it really looks at uh and minds our database to tell us what consumers are probably good to call right now because they're uh in the market or you can give them a great trade value, keep their payments the same, all those different variables.

Jim Fitzpatrick 13:34

Sure, sure. Speaking of um trades and used car sourcing, which is where I'm going with this, are you buying a lot of cars out of the service drive?

unknown 13:43

We are, we are.

SPEAKER_02 13:44

And we're also looking through for Facebook Marketplace, we have KBB, it's an offer.

unknown 13:50

It's so important right now. If you're looking to drive leads to your business, is to try to source those cars, other than treatments, in that affordability uh uh segment.

SPEAKER_02 14:02

So under 30,000 is huge, and even under 20,000. So if you put a car online uh that you can purchase from a private owner, and it's a specific car that you can't go online and find a lot of at, you're gonna get a lot of leads on that vehicle.

unknown 14:19

Yeah. And in this day and age right now, with that continual affordability issue, and you know, cars are new cars are 50,000 transactional prices right now. Pre-driven is really uh a great opportunity for the consumer as well as CPO and marketing that as well. So sourcing new cars is huge, and you know, we have a leg up right now. That's why new cars are so important to drive used car business, which drives service business, which creates UIO. Right.

SPEAKER_02 14:51

And then you once you get that consumer into the that vehicle, obviously, hopefully, if you give them a great experience, they'll stay with you for life, and uh, you know, that pays dividends forever.

Jim Fitzpatrick 15:03

You know, you can't put a brace on that. Yeah. I just spoke to Mr. Chris at uh, he's a general manager of Toyota uh Motors, and uh he said they're running about a 15-day supply of vehicles across all of their Toyota stores. Where does Hyundai fit into that? What kind of a turn are you guys on right now, or day supply, I should say?

SPEAKER_02 15:22

So it's it's obviously a little higher than 15 days right now.

Jim Fitzpatrick 15:26

Yeah. Yeah. 15 days is obviously I couldn't believe it.

SPEAKER_02 15:29

It's crazy. Now we have Hyundai as well, which is probably somewhere on a 25-day supply right now.

Jim Fitzpatrick 15:34

Okay.

SPEAKER_02 15:35

Um, but Hyundai right now, our day supply isn't bad right now, and obviously the focus is on driving incentives and and turning your inventory, which is so important right now, uh, with where we're at in terms

AI For Service Scheduling And BDC

SPEAKER_02 15:50

of uh uh normalization post-COVID and interest rates where they're at. Now we've had a windfall because rates have gone down, but uh turning inventory is so important, and that's what we do in dealer council, that's what we talk about with the executives, is we need to continually push uh inventory, continually turn it, and that will drive uh obviously profitability of the bottom line. Uh it it it's always an obstacle, and that's something you have to focus on, and hopefully we'll continue to drive that down. And I don't know if you want to be in a 15-day, obviously. Uh I I like volume and I like to get all the residuals you get from volume. So for me, volume is huge. So for me, 30, 30, 45, 60 days is just fine.

Jim Fitzpatrick 16:37

Yeah, yeah, absolutely. Yeah, you so if you're a Toyota dealer, not only are you fortunate enough to be a Toyota dealer, but you have no floor plan cost at all.

SPEAKER_03 16:49

It offers a lot of benefits as well.

Jim Fitzpatrick 16:50

So no question about it. And um uh you mentioned your fixed ops department is is just cranking along. I mean, no no issues there. You just need more technicians, maybe.

SPEAKER_02 17:03

We've actually done pretty well with technicians. Uh big stocks is so important right now. Obviously, 74 and plus plus margins in uh service, 35 plus plus plus margins in parts. But more important to me is that customer has to get a great experience of service.

SPEAKER_03 17:23

Yeah.

SPEAKER_02 17:23

As they say, sales has that customer for the first day, and then it's a service customer.

Jim Fitzpatrick 17:29

If you're gonna retain that customer, which is it's all about retention, I know you've had guests on there, and that's all they focus on. That's right.

unknown 17:35

Service business retention. If you want to get that customer to continue to come to your service department and then look to buy another car and refer customers to you, the service is so huge. And again, that's where we have a leg up on these uh these businesses that uh are direct to consumer, they just don't have the same experience that they can give the consumers. We can offering those type of opportunities.

SPEAKER_02 17:58

But again, you know, if you drop the ball there, your retention is gonna go down, and you know, that lifeline, and that consumer that's bought a car from you trusts you, will uh obviously not fight you as much. And uh send your referrals easier, more streamlined process.

Jim Fitzpatrick 18:15

Yeah, yeah, no question about it. Hey, can you give us any kind of an update with Hyundai and Amazon? Where does that where does that stand today?

SPEAKER_02 18:23

So we're working right now with Amazon. Obviously, uh we were the first, and obviously there's always some headwinds when you do that, and obviously you're dealing with a technology company, the second to none, but obviously now their understanding of the car business isn't as easy as everybody thinks it is. It's not like you can't send a car in a box the same day. It's a whole different experience. So we're evolving right now, we're having conversations with them, and I think we're we need to look when it comes to the financing of the vehicle. And I think that's the conversation we had at the beginning, Amazon. We had an idea of what they wanted to do in terms of partnering with Hyundai, but I think as time has gone on, I think that uh some of the obstacles they're working with us right now, and and hopefully moving forward, uh, we'll get more business out of that.

unknown 19:16

I think it's all incremental business.

SPEAKER_02 19:18

And obviously, Amazon has that c that uh nobody else has, and you know, in terms of what they've done, it's obviously very impressive. Yeah, yeah, no flight.

unknown 19:32

And you know, we're evolving, and now obviously they're utilizing uh free-driven cars as well and putting it on their site. And you know, we know how many eyeballs are on Amazon.

SPEAKER_03 19:43

So again, yeah, the conversation is there, it's not where we want it to be, but I think it's evolving.

unknown 19:48

I think it continues to get better.

SPEAKER_02 19:50

And hopefully the next time we'll talk, we'll have uh a conversation that we're crushing it with Amazon.

Jim Fitzpatrick 19:56

So anything uh that that keeps you up at night, Jeff Rosen for Rosen Automotive Group. I mean, here you are now, you've got how many stores do you have in in is it Hyundai and Hyundai and Kia?

SPEAKER_02 20:07

I have uh Hyundai, Kia, two Nissans, Hyundai and Ford.

Jim Fitzpatrick 20:13

Okay right now. So I'd be remiss if I didn't ask you about your Nissan stores. How are you feeling about that franchise today?

SPEAKER_02 20:21

So let me say I've had a lot of experience. Nissan was my first store back in 1989. I had a store in Milwaukee and a store in Madison as well.

unknown 20:29

I think the executives that they have right now are really, really good.

SPEAKER_02 20:34

I think they are uh I think they have uh the knowledge of what needs to get done.

unknown 20:39

I

Used Sourcing Inventory Turns And Retention

unknown 20:40

think that uh they're focusing on what's important at selling cars and getting rid of all those uh other obstacles that we had in the past, and I think it just continues to get better.

SPEAKER_02 20:51

I think the product is great, and I think the most important thing is obviously they've been a little late tonight, for instance, starting uh right now that's coming out. And I've I've known the executives for a long uh while and I feel very confident that uh we're turning the corner and uh obviously they're they're doing very well and uh hopefully that continues as well.

SPEAKER_03 21:13

That's cool.

SPEAKER_02 21:13

All my OEMs, I want them all to do well. It helps me sleep at night to your point. So uh I don't do a great job in terms of sleeping, sleeping, and uh waking up in the middle of the night and uh elbowing my wife. So hopefully uh business gets better, and now I turn it over and put more response on my children so they don't sleep at night. Okay, sit on to me.

Jim Fitzpatrick 21:38

Hey, one last question. Uh because uh you got a Ford store. Currently, uh Jim Farley was in a uh interview and he and the the guy, the interviewer said, Hey, you're driving a Chinese vehicle right now, right? And he goes, Yes, I am. Right? He said, I why are you driving why are you doing that? He said, Because I gotta know what these people are up to. They drive they build a great car, it's affordable, you know. Range is longer than ours, we got to stay on top of this thing. What's your take on the Chinese market, the Chinese vehicles that could possibly, you know, come into the U.S. market?

SPEAKER_02 22:11

So that's the discussions we've had. So we really got to get our arms around it. Obviously, they're not in the U.S. market right now, but they are, I believe, in Mexico.

Jim Fitzpatrick 22:18

So scarce. Right.

SPEAKER_02 22:21

Yeah, they are they're filtering in the United States. So instead of trying to fight it, we need to really get on board and look at what works for them.

unknown 22:31

Obviously, being subsidized a little bit by the government.

SPEAKER_02 22:34

I don't know all the ins and outs considerably.

unknown 22:37

So we got to make it an even playing field because that's not fair.

SPEAKER_03 22:41

Right.

unknown 22:42

And obviously that gives them a uh a leg up on in terms of bracing and competitiveness.

SPEAKER_02 22:48

But for me, it's always a glance at four. So you have to look at what the positives are, what they're doing, and then try and evolve, similar to what we're doing with the franchise system, similar to Carvana, Tesla. You know, you can do all you want in terms of fighting it, but you know, if you're gonna uh be competitive, which is what we like, and evolve our business and always continue to get better, we've got to be able to see what other competitors are doing, don't put our head in the sand because eventually, depending on who's in office, it will happen. So we've got to be ready for it. We've got to agree. I agree. Mr. Farley's point, find out the positives and why they're doing what they're doing, and try and pop our business as well.

Jim Fitzpatrick 23:34

Well, as a result, I heard now in the press that uh that that Ford is working on a $30,000 truck, uh that that EV truck. That's pretty astounding.

SPEAKER_02 23:46

Product is the light blood of the business. If you don't have great product, it doesn't matter how good you are or how much you try and overcome the manufacturer,

Amazon Partnership Nissan Outlook China Threat

SPEAKER_02 23:55

that's what drives our business. That's right. That's right. The telluride, all halo cars that drive customers to the dealership, that's where it all starts. And obviously, great marketing, a great dealer body, uh, taking care of the customers, protecting the dealership, you know, what's going on right now in terms of transparency and evolving digitally and AI. That's everything that keeps you up at night right now.

unknown 24:22

And you know, better to have good dreams than nightmares.

SPEAKER_02 24:25

So hopefully get our arms around it and keep uh continuing the momentum and uh giving the customers great experience. But again, product is what it's all about. Obviously, it makes our jobs a lot easier.

Jim Fitzpatrick 24:38

That's right. The hardest working man in the car business, Jeff Rosen. Thank you so much for all the time you give us here at uh CBT News. We very much appreciate it. Best of luck to you. Love to do a follow-up with you to see how things are moving along.

SPEAKER_02 24:53

And uh when I'm up at night, I wake up in the morning and I can see you or your son's smiling faces. So that puts a little smile on my face.

Jim Fitzpatrick 25:03

Well, that means a lot. More than you know. Thank you so much. You too, take care.

SPEAKER_00 25:15

Thanks for watching Inside Automotive with Jim Fitzpatrick.